Out of bounds when the process is in control

Reference no: EM13982850

1. Short-term rates ?uctuate daily. It may be assumed that the yield for 90-day Treasury bills in early 2007 was approximately normally distributed with mean 4.92% and standard deviation 0.3%.12 Find a value such that 95% of the time during that period the yield of 90-day T-bills was below this value.

2. In quality-control projects, engineers use charts where item values are plotted and compared with 3-standard-deviation bounds above and below the mean for the process. When items are found to fall outside the bounds, they are considered non- conforming, and the process is stopped when "too many" items are out of bounds. Assuming a normal distribution of item values, what percentage of values would you expect to be out of bounds when the process is in control? Accordingly, how would you de?ne "too many"? What do you think is the rationale for this practice?

Reference no: EM13982850

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